What is a Value-Added Tax – VAT

What is a Value-Added Tax – VAT

VAT-IN-UAE emiratesvatValue Added Tax -VAT is an indirect tax on the domestic consumption of goods and services, except those that are zero-rated such as food and essential drugs or are otherwise exempt such as exports.

It is levied at each stage in the chain of production and distribution from raw materials to the final sale based on the value (price) added at each stage.

In other words Value Added Tax – The amount of VAT that the user pays is the cost of the product, less any of the costs of materials used in the product that
already been taxed.

It is not a cost to the producer or the distribution chain members, and whereas its full brunt is borne by the end consumer, it avoids the double taxation (tax on tax) of a direct sales tax. Value Added Tax -VAT was introduced by the European Economic Community (now the European Union) in the 1970s.

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